During the good times, Shelby County's economy was defined by rapid growth and rising prosperity -- which has made a slow recovery from the bruising recession that began in 2007 painful to endure.

For most of the last three decades, Shelby County was the place in Alabama where the greatest number of houses were being built because it was where the greatest number of people were moving to live. Schools were bursting at the seams, developers were building retail centers and office parks, and new roads, sewers, water mains and power lines were installed to keep up with all of the growth.

Housing growth in Shelby County helped fuel business expansion in Birmingham and Jefferson County and contributed to Hoover's rise to prominence in what officially has been re-christened the "Birmingham-Hoover Metropolitan Statistical Area."

For officials in a place accustomed to rapid ascent, standing still can feel like falling.

"Our unemployment rate still leads the state at 5.4 but it is still over two times what we posted prior to the recession," Alex Dudchock, Shelby County manager, said. "That's still too many unemployed and underemployed county residents."

Economic development officials in Shelby County say they are working to recruit new industry and help existing companies add jobs to drive down the unemployment rate. There were 93,681 jobs in Shelby in November, down from 97,715 in April 2007, when the county's unemployment rate was a mere 1.7 percent, state figures show.

"We've had some increased looks from distribution companies," said James Dedes, executive director of the Shelby County Economic & Industrial Development Authority. "We're beginning to see some uptick in that type of activity."

State Sen. Cam Ward, R-Alabaster, whose district includes Shelby County, predicted that distribution activities will help carry the county back to full employment, defined by many economists as a 5 percent jobless rate.

"We have seen ourselves become sort of a home to distributorships," he said. "Some distributors from out of state and a lot from Jefferson County have moved into Shelby County in recent years. A lot of them had laid off several workers during the recession and I'm seeing their hiring pick back up again."

Changing strategies

Dedes said companies in other industries are starting to consider new facilities again, but operators want to pay as little as possible and get government help as much as possible.

Construction projects like this $7 million improvements at a North Shelby County treatment plant have been a familiar sight in the county for years. But the recession and the sluggish recovery that has followed has slowed Shelby's momentum. (The Birmingham News/Bernard Troncale)

"We're beginning to see some companies start to look for sites," Dedes said. "One thing that is very consistent is they all are looking for bargains. They want very inexpensive property and all of the incentives we can deliver. We have to look at them very critically and make sure we're doing appropriate incentives for the appropriate projects."

An extra-cautious approach to incentives is one of many new tacks that Dedes said the county is taking in economic development efforts.

"We are actively seeking new and creative ways to partner with our regional and state allies for joint marketing efforts to share program expenses and increase our exposure to prospects," he said. "We are developing stronger relationships with our private sector counterparts in commercial real estate to help jointly market sites and buildings."

Dudchock said the county is trying to be frugal as revenues have grown thin since the recession.

"We are cautiously optimistic that our economy is improving," he said. "Our county commission and management team continue to budget and live within our means."

That's necessary because a slowdown in housing starts and an increase in foreclosures have slowed the flood of property tax income that was pouring into city and county coffers. Slow retail sales and associated sales taxes have decreased another flow of funds.

'New normal'

Dudchock said it's not just governments in the county having to do with less money.

"Our county's per capita earnings have decreased by 12 percent during the recession and therefore we, too, have a way to go," he said.

Between 2006 and 2010, per capita income in Shelby dropped from $34,930 to $30,703, he said. At the same time, Shelby's median household income declined from $71,829 to $65,673 and average household income went from $89,259 to $80,078.

That's enough to cause people like Dedes to embrace the notion many analysts have expressed -- that there is a "new normal" when it comes to the economy.

"In terms of recovering from the recession, I believe we are not seeing a recovery as defined by a return to 2007, but more of a recovery as an adjustment to the new normal," he said. "Many companies are hesitant to incur new debt or hire a significant number of new employees. Both the public and the private sectors are focused on doing more with less, maximizing resources -- both human and capital -- and waiting for a real improvement in unemployment numbers. I would define this phase as a stabilizing mode instead of a recovery mode."

Franz Lohrke, a professor at the Brock School of Business at Samford University, said economies like Shelby's that rely heavily on housing and small business experienced a double-whammy in the U.S. recession that began in late 2007 and officially ended in mid-2009.

"Depending on who you talk to, somewhere between one in six or one in four small business owners use their house as collateral," he said. "When you have 46 percent of the houses sold in the United States in November being foreclosures, there is still a glut of inventory."

Lohrke said that 46 percent includes actual
foreclosures and the short sales in which homeowners sell houses for less than
what is owed on the mortgage.

Lohrke said a recent National Federation of Independent Businesses survey noted that during the recession that began in 2000 -- the result of the dot-com bubble bursting -- those hurt were left with worthless pieces of paper in Internet stocks.

"Now, we don't have worthless paper sitting around, we have houses," he said. "That's going to take a lot longer to clear up than worthless pieces of paper. You can't just toss a house away."

Dudchock said small business is one of several areas the county wants to help expand.

There also is an effort to bolster higher education in the county.

"We are partnering with the University of Montevallo and the city of Montevallo on initiatives that will assist in the expansion of enrollment at the university by 500 students or 16 percent during the next five years," he said, noting the university had 3,087 students enrolled in the latest fall semester.

Promising developments

Another reason for optimism: A recent four-fold rise in new water lines being tapped, a sign that new home construction could be picking up.

"An encouraging sign has been the increase in residential water taps on the county water system during the first quarter of this fiscal year," he said. There were 39 of those since October of this year, compared to just 10 the same three months last year, he said.

New home construction in Shelby remains far below its peak. In October, there were 10 single family building permits issued in Calera, four in Pelham and three in Alabaster, according to the Alabama Center for Real Estate at the University of Alabama. In June 2007, before the downturn, there were 42 permits issued in Calera, 25 in Pelham and 15 in Alabaster.

Other developments show promise.

A possibility on the horizon is a new $20 million rehabilitation hospital that HealthSouth Corp. wants to build in Shelby County. The health care company is going through the Alabama Certificate of Need Review Board process to win approval for the 34-bed hospital to be built somewhere along the Interstate 65 corridor.

"We're very excited about that project," Dedes said. "The health care sector has always been an important sector for us in terms of recruiting new companies and new jobs in Shelby County. We're excited about that project and will continue working with HealthSouth as they go through the CON process."

Dudchock said the county will push for Gov. Robert Bentley to help with that and other projects in the county where he was born.

"We are hopeful Gov. Bentley will champion improvements with the State's CON process and advance capacity improvements on I-65 to the Calera-U.S. 31 exit and U.S. 280 to Chelsea-Shelby County Highway 47," he said.

Ward said there are more promising developments.

"Retail has been a big deal," he said. "Alabaster just announced that in the next couple of years they will be developing their third shopping center. Pelham is also seeing an increase in retail development. Calera has some retail development. All along the I-65 corridor there has been a big uptick in increased attention in retail development. It's not just talk -- there are maps on the ground for a lot of this."

Ward also made a not-so-bold prediction for Shelby County.

"I think we will be the first county in the state to reach full employment again," he said.